Running a successful co-operative bank requires tracking and measuring key performance indicators(KPIs). Partnering with the right metrics allows one to assess the bank's performance and set methods for improvement. In this article, we'll go through top seven co-operative bank KPI metrics that are essential to track and calculate.
Customer satisfaction rate is a crucial KPI in the banking industry. As of 2021, customer satisfaction for co-operative banks remained at 84%. Nevertheless, it's necessary to track this metric and take steps to improve it.
- Loan approval rate is another essential KPI to monitor. Approval rates were at 83% in 2021, which is an improvement from the previous year. The ability to provide loans without delay could spell the difference between attracting and losing customers.
- Percentage of customers who are also owners is a novel metric for co-operative banks. It signifies the fundamental difference between cooperative banks and traditional banks. Since patrons own the cooperative institution, measuring the number of customers who act as owners proves valuable to assess the bank's growth and development.
- Growth rate in customer base is a vital KPI that measures expansion in the number of patrons. In 2021, co-operative banks recorded a growth rate of 5.62%, reflecting the increase in customers over the past year.
These three KPIs are only a few of the many critical indicators one should consider when managing or operating a co-operative bank. We'll explore more in-depth data on these KPIs and four others in the next sections.
Customer satisfaction rate
Customer satisfaction rate is one of the most critical KPIs for any cooperative bank as it measures the level of satisfaction that customers have with the bank's products and services. Here's everything you need to know about this KPI:
Customer satisfaction is a measure of how happy customers are with the services provided by a cooperative bank. It is usually based on a survey that measures satisfaction levels across different areas of the bank, such as customer service, product offerings, and online banking platforms.
The use of customer satisfaction rate KPI helps the bank understand how well it is serving its customers and where it needs to improve. It is also used to increase customer retention rates and attract new customers through positive word of mouth.
How To Calculate KPI:
To calculate the customer satisfaction rate KPI, you need to conduct a survey among your customers. The survey should contain questions related to customer service, product offerings, and online banking platforms. The survey should be conducted periodically to track the satisfaction level.
Customer Satisfaction Rate = (Number of Satisfied Customers / Number of Survey Respondents) x 100
Suppose XYZ cooperative bank conducted a survey among 800 customers, out of which 720 responded. Out of the 720 respondents, 680 customers were satisfied with the bank's services.
Customer Satisfaction Rate = (680 / 720) x 100 = 94.44%
- Helps to enhance customer experience
- Improves customer retention rates
- Attracts new customers through positive word of mouth
- May not be an accurate representation of overall customer satisfaction levels
- Survey bias can affect the outcome
- Expensive and time-consuming to conduct surveys
KPI Industry Benchmarks:
The industry benchmark for the customer satisfaction rate KPI is around 90%. However, this varies depending on the bank's size, market, and customer base.
- Conduct regular surveys to track customer satisfaction levels.
- Act on the feedback received from customers to improve services.
- Compare customer satisfaction rates with industry benchmarks to identify areas for improvement.
Co-Operative Bank Financial Model
Loan Approval Rate
One of the most important KPIs for co-operative banks is the loan approval rate. This metric helps to determine how successful the bank is at processing loan applications, and can provide insights into how well the bank's lending practices are performing overall.
The loan approval rate measures the percentage of loan applications that are approved by the bank. It is calculated by dividing the number of approved loan applications by the total number of loan applications received during a given period.
The loan approval rate is a valuable KPI for co-operative banks because it can help to identify areas where the bank's lending policies may need to be adjusted. For example, if the loan approval rate is consistently low, it may be an indication that the bank is not lending enough to creditworthy borrowers.
How To Calculate KPI
To calculate the loan approval rate, you will need to gather data on the number of loan applications received and the number of those applications that were approved. The formula for calculating the loan approval rate is as follows:
Let's say that a co-operative bank received 100 loan applications in a given month, and approved 80 of those applications. The loan approval rate would be calculated as follows:
- Helps to identify the bank's overall lending performance
- Can provide insights into areas where lending policies may need to be adjusted
- Allows for benchmarking against industry standards
- Does not provide insight into why loan applications may have been declined
- May not be applicable for co-operative banks with non-lending business models
- Can be affected by factors outside of the bank's control, such as economic conditions or changes in regulations
Industry Benchmarks for Loan Approval Rate
According to industry benchmarks, the average loan approval rate for co-operative banks is around 70%. However, this can vary depending on a variety of factors, such as the bank's target market or the types of loans being offered.
Tips & Tricks
- Regularly review loan approval rates to identify trends and make adjustments to lending policies as needed
- Consider segmenting loan approval rates by loan type or borrower demographic to gain more specific insights
- Monitor external factors that may impact loan approval rates, such as changes in interest rates or shifts in the local economy
Percentage of customers who are also owners
In a co-operative bank, the customers are also owners of the bank. This KPI measures the percentage of customers who are also owners, reflecting the level of engagement and loyalty among customers towards the bank.
The percentage of customers who are also owners is a KPI that measures the number of customers who own shares in a co-operative bank, expressed as a percentage of the total number of customers of the bank. The KPI reflects the level of customer loyalty and engagement with the bank.
The KPI is particularly useful for co-operative banks as it helps them to understand the level of engagement and loyalty among their customer base. By tracking this KPI, co-operative banks can identify areas where they can improve their services to increase customer loyalty and engagement. Additionally, it is also useful for investors in assessing the growth potential of co-operative banks.
How To Calculate KPI
To calculate the percentage of customers who are also owners, divide the total number of customers who own shares in the co-operative bank by the total number of customers, and then multiply the result by 100 to get the percentage.
Assuming a co-operative bank has a total of 10,000 customers, out of which 2,000 customers own shares in the bank, then the percentage of customers who are also owners will be calculated as follows:
- Provides insights into customer engagement and loyalty towards the bank.
- Helps in identifying areas where the bank can improve its services.
- Useful for investors in assessing the growth potential of co-operative banks.
- Can be influenced by the bank's marketing efforts to promote ownership among customers.
- Does not take into account the level of ownership of each customer.
- May not provide a complete picture of customer satisfaction and loyalty.
KPI Industry Benchmarks for the KPI: ' Percentage of customers who are also owners '
According to a survey conducted by the National Cooperative Bank, the average percentage of customers who are also owners in co-operative banks is around 17.4%. However, the percentage can vary widely depending on the size and location of the co-operative bank.
Tips & Tricks:
- Consider offering discounts on services to customers who own shares in the bank to promote ownership.
- Regularly communicate with customers who own shares in the bank to keep them engaged and informed about the bank's activities.
- Create a sense of community among customers who own shares in the bank by organizing events and activities that encourage interaction and engagement.
Growth rate in customer base
Co-operative banks have been gaining popularity in recent times due to their customer-centric approach and the ability to solve customer problems. They have become more customer-friendly, which has enabled these banks to grow their customer base. One of the key performance indicators that measure the success of a co-operative bank is the growth rate in customer base. In this chapter, we will discuss what the growth rate in customer base KPI is, how to track and calculate it, as well as its industry benchmarks, advantages, and disadvantages.
The growth rate in customer base is a financial metric that measures the percentage increase or decrease in a co-operative bank's customer base during a specific period. This metric indicates how well a co-operative bank is attracting new customers and retaining existing ones.
The growth rate in customer base KPI is an important performance indicator for co-operative banks. It helps these banks to analyze their performance in terms of customer acquisition and retention. Co-operative banks can use this metric to set targets and goals for acquiring new customers and retaining existing ones. It also helps banks to identify their strengths and weaknesses in customer acquisition and retention.
How To Calculate KPI
The formula for calculating the growth rate in customer base is as follows:
- Number of new customers = The total number of new customers acquired during a specified period.
- Number of lost customers = The total number of customers that left during the same period.
- Total number of customers = The total number of customers at the beginning of the period.
Let's assume that a co-operative bank had 5,000 customers at the beginning of the year. During the year, the bank acquired 750 new customers, and 150 customers left. Using the above formula, the growth rate in customer base would be:
- Helps co-operative banks to measure their customer acquisition and retention performance.
- Enables banks to set targets and goals for acquiring new customers and retaining existing ones.
- Helps banks to identify their strengths and weaknesses in customer acquisition and retention.
- The growth rate in customer base does not indicate the profitability of a co-operative bank.
- It does not consider the quality of the acquired or retained customers.
- It does not factor in the cost of acquiring or retaining customers.
KPI Industry Benchmarks
The average growth rate in customer base for co-operative banks varies by region and country. Generally, a growth rate of at least 5% is considered healthy for co-operative banks. However, in some markets, a growth rate of 10% or above is expected from co-operative banks.
Top tips for tracking and improving Growth rate in customer base KPI:
- Identify the channels that bring in the most customers and invest in them.
- Offer attractive rates and promotions to retain existing customers and attract new ones.
- Analyze the reasons why customers are leaving and take steps to address them.
Net promoter score
As a serial entrepreneur, I have found that keeping track of key performance indicators (KPIs) is essential for running a successful business. One such KPI that every co-operative bank should keep an eye on is the net promoter score (NPS).
The NPS measures customer loyalty by asking a simple question - 'On a scale of 0-10, how likely is it that you would recommend our services to a friend or colleague?' Based on the responses, customers are divided into three categories: detractors (0-6), passives (7-8), and promoters (9-10).
The NPS is a valuable tool for co-operative banks as it helps them understand their customers' loyalty and likelihood to make future transactions. By tracking this KPI regularly, banks can identify areas for improvement and take actions to increase customer satisfaction.
How To Calculate KPI
The NPS formula is simple: subtract the percentage of detractors from the percentage of promoters.
For example, if 50% of customers are promoters, 30% are passives, and 20% are detractors, the NPS would be:
Let's assume a co-operative bank has sent out an NPS survey to its customers. Out of 100 respondents, 40 are promoters, 30 are passives, and 30 are detractors. The NPS would be:
- The NPS is a simple and easy-to-understand metric.
- It provides insight into customer loyalty and satisfaction.
- It can be used to benchmark against industry competitors.
- The NPS does not provide information on why customers are promoters, passives, or detractors.
- It has been criticized for being too simplistic and not providing a complete view of customer satisfaction.
- It may not be applicable to all industries and businesses.
KPI Industry Benchmarks for the KPI: ' Net promoter score '
The average NPS varies by industry, but in general, a score of 50 or higher is considered excellent, while a score of 70 or higher is exceptional. For co-operative banks, the average NPS is around 35.
Tips & Tricks:
- Follow up with customers who are detractors to understand the reasons for their dissatisfaction.
- Use NPS as part of a broader customer satisfaction survey that includes additional questions to provide more context.
- Benchmark your NPS against competitors and strive to be above average.
Average Time Taken to Process Transactions
In today's fast-paced world, customers expect quick and smooth banking transactions. One such important KPI metric for co-operative banks is the average time taken to process transactions. This metric not only indicates the efficiency of the bank but also reflects the satisfaction level of customers.
The average time taken to process transactions is the time taken to complete a transaction, from initiation to settlement, divided by the number of transactions processed within a given period. The time includes the time taken for transaction initiation, authorisation, verification, and settlement.
The average time taken to process transactions KPI is essential for co-operative banks to measure the efficiency of their operations. It helps identify bottlenecks and areas of improvement in the transaction process and customer service. Additionally, it is useful for identifying staffing requirements and managing customer expectations.
How To Calculate KPI
To calculate the average time taken to process transactions, first, determine the total time taken to process all transactions within a given period. Next, divide the total time by the total number of transactions processed during the same period. The formula for calculating the KPI is:
Average time taken to process transactions = Total time taken to process transactions ÷ Total number of transactions processed.
Suppose a co-operative bank processes 10,000 transactions within a month, and the total time taken to process those transactions was 1,000 hours. The average time taken to process transactions is:
Average time taken to process transactions = 1000 ÷ 10,000
Average time taken to process transactions = 0.1 hours or 6 minutes
- The average time taken to process transactions KPI helps identify operational inefficiencies.
- It serves as an essential tool for optimising the transaction process.
- It helps banks to manage customer expectations and improve customer satisfaction.
- The average time taken to process transactions KPI can be affected by external factors, such as network connectivity and third-party service providers.
- It does not account for the complexity of transactions, which could influence the time taken to process them.
- It requires continuous monitoring to maintain and improve the efficiency of the transaction process.
KPI Industry Benchmarks
Benchmarks vary depending on the type of co-operative bank and the transaction types. However, the benchmark for processing a standard transaction should be between 10 seconds to 2 minutes.
Tips & Tricks
- Train staff to streamline transaction initiation and settling processes
- Implement robust transaction authorisation and verification procedures
- Invest in technology to automate manual processes and minimise human errors.
Percentage of profits shared with customers
Definition: Percentage of profits shared with customers is a KPI that measures how much profit a co-operative bank shares with its customers in the form of dividends or patronage refunds.
Use Case: This KPI is important because co-operative banks are owned by customers who are also referred to as members. These members invest in the bank and share in the profits generated by the bank. Therefore, measuring the percentage of profits shared with customers can help evaluate the bank’s commitment to its members as well as the levels of return that members receive from their investment.
How to Calculate KPI: Percentage of profits shared with customers is calculated by dividing total dividends paid or patronage refunds by the total net income of the bank, and then multiplying the result by 100. The formula for this KPI is:
Percentage of profits shared with customers = (Total dividends paid or patronage refunds / Total net income) x 100
Calculation Example: If a co-operative bank has a total net income of $1,000,000 and pays $50,000 in dividends to its customers, the calculation for percentage of profits shared with customers would be:
Percentage of profits shared with customers = ($50,000 / $1,000,000) x 100 = 5%
- Helps to evaluate the bank’s commitment to its members.
- Helps to monitor return on investment for customers.
- Encourages transparency and accountability.
- The KPI does not take into account other types of benefits that members may receive from the bank.
- Dividends and patronage refunds may vary from year to year and therefore make this KPI volatile.
- The KPI does not take into account the total number of members in the bank or the proportion of profits shared per member.
KPI Industry Benchmarks for the KPI: The industry benchmarks for percentage of profits shared with customers vary depending on the size, location, and type of co-operative bank. However, as a general guide, the average percentage of profits shared with customers for co-operative banks in the United States is around 5-7%.
Tips & Tricks:
- Ensure that the calculation of this KPI includes both dividends and patronage refunds.
- Compare the percentage of profits shared with customers to the average percentage in the industry to assess the bank’s performance.
- Regularly monitor this KPI to evaluate the bank’s commitment to its members, especially during periods of economic downturns.
Partnering with the right metrics is essential to ensure the success of a co-operative bank. Key Performance Indicators, or KPIs, allow one to assess the bank's performance, identify areas that need improvement, and set strategies to address them. In this article, we've discussed the top seven co-operative bank KPI metrics that are critical to track and measure.
One of the critical KPIs that we discussed is customer satisfaction rate, which is a crucial factor in the banking industry. Measuring this metric is essential to ensure that the bank delivers quality service and meets customer needs. Another essential KPI is the approval rate for loans since customers expect quick and efficient service when applying for loans.
The percentage of customers who are also owners is a novel metric that demonstrates the unique nature of co-operative banks compared to traditional banks. Measuring the percentage of customers who are also owners provides valuable information in assessing the bank's growth and development.
The growth rate in customer base is another vital KPI that measures the increase in the number of customers. This metric reflects the bank's ability to attract and retain customers, which is crucial to its growth and long-term success.
These KPIs are only a few of the many critical indicators that one should consider when managing or operating a co-operative bank. By tracking and measuring these metrics, bank managers can make informed decisions, improve their performance, and ensure long-term success for their institution.
Overall, tracking and measuring KPIs is an essential aspect of managing and operating a co-operative bank. By partnering with the right metrics and using them to inform their strategies, bank managers can ensure that they deliver quality service, meet customer needs, attract and retain customers, and achieve long-term success.
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